Thursday, February 10, 2011



Giving away our money

National has made a lot of noise about how the government spends too much money, and of the need for "fiscal restraint" to "put the books in order". So why is it planning to give away $5 million of our money to its mates for doing nothing?

Up to $5 million has been set aside to recompense companies bidding for the contract to build and run a private prison at Wiri, Auckland, should National lose the November election.

The money, which has yet to be approved by the Cabinet, is to instil confidence in public private partnerships (PPPs) and acknowledge the political risk of the project not proceeding if Labour wins, said Jeremy Lightfoot, PPP director for the Corrections Department.

This speaks volumes about the government's competence at handling PPPs and the way they are likely to approach them. The whole idea of PPPs is supposedly to get stuff cheap by transferring financial risk to the private sector. Instead, our government is carrying that risk, and handing these companies risk-free profits. If this is how they're handling the pre-negotiations, I'd hate to see an actual contract.

Meanwhile, Mr Lightfoot is described as having "significant private-sector experience in PPPs". That should have been a warning sign to the government. In the UK, where Mr Lightfoot comes from, PPPs have been a complete disaster, an instrument for looting the state and providing guaranteed, risk-free profits to the private sector. The UK government wastes billions on this, paying £262bn so far for assets worth only £55bn. And there are still 37 years to go on the contracts...

National looks set to take us down the same path, overpaying the private sector for our prisons, our roads, our schools, and our hospitals. Its just a legalised form of theft, another type of wealth transfer. Instead of getting good public services, our taxces will be misspent on boosting the profits of private corporations. We should not allow this. But if we want to stop it from happening, we need to turf National out in November.